Water Supply and Sanitation in South Africa - Turning Finance into Services for 2015 and Beyond
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An AMCOW Country Status Overview Water Supply and Sanitation in South Africa Turning Finance into Services for 2015 and Beyond
The first round of Country Status Overviews (CSO1) published in 2006 benchmarked the preparedness of sectors of 16 countries in Africa to meet the WSS MDGs based on their medium-term spending plans and a set of ‘success factors’ selected from regional experience. Combined with a process of national stakeholder consultation, this prompted countries to ask whether they had those ‘success factors’ in place and, if not, whether they should put them in place. The second round of Country Status Overviews (CSO2) has built on both the method and the process developed in CSO1. The ‘success factors’ have been supplemented with additional factors drawn from country and regional analysis to develop the CSO2 scorecard. Together these reflect the essential steps, functions and results in translating finance into services through government systems—in line with Paris Principles for aid effectiveness. The data and summary assessments have been drawn from local data sources and compared with internationally reported data, and, wherever possible, the assessments have been subject to broad-based consultations with lead government agencies and country sector stakeholders, including donor institutions. This second set of 32 Country Status Overviews (CSO2) on water supply and sanitation was commissioned by the African Ministers’ Council on Water (AMCOW). Development of the CSO2 was led by the World Bank administered Water and Sanitation Program (WSP) in collaboration with the African Development Bank (AfDB), the United Nations Children’s Fund (UNICEF), the World Bank and the World Health Organization (WHO). This report was produced in collaboration with the Government of South Africa and other stakeholders during 2009/10. Some sources cited may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the collaborating institutions, their Executive Directors, or the governments they represent. The collaborating institutions do not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the collaborating institutions concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to wsp@worldbank.org The collaborating institutions encourage the dissemination of this work and will normally grant permission promptly. For more information, please visit www.amcow.net or www.wsp.org Photograph credits: Cover photograph by The Department of Water Affairs (South Africa) Photograph on inside back cover by Lani van Vuuren-WRC © 2011 Water and Sanitation Program
Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
An AMCOW Country Status Overview
Water
Supply and
Sanitation in
South Africa
Turning Finance into
Services for 2015
and Beyond
1An AMCOW Country Status Overview
Strategic Overview
Reform overview. South Africa underwent a major Learning and Improving
transition to a full democracy in 1994. The new government
embarked on an ambitious program to eradicate backlogs in Notwithstanding these impressive achievements, South
water supply and sanitation, underpinned by development Africa has demonstrated a willingness to seek ongoing
of sound sector policy and legislation. Initially, this improvements and to meet new challenges.
program was driven by the central government. In 2003
responsibilities for service provision were devolved to local There remain three areas of service backlogs that are “hard
government in line with the constitutional allocation of to reach”: sanitation in informal settlements; water supply
functions. Although much has been achieved, significant in deep rural areas; and rural sanitation. There is evidence
challenges remain. There is a need to build and sustain that the pace of delivery in these three areas has slowed.1
capacity at the local government level to continue to invest Participatory approaches for the development of rural water
in, operate, and maintain services; to innovate and create supply and sanitation projects, piloted and implemented
more effective delivery pathways to reach the “hard to in the early 1990s by nongovernmental organizations
reach”; and, to improve the sustainability of services already (NGOs), were largely overtaken by a government-led drive
delivered. to supply new infrastructure from about 1995 onwards.
Responsibility for investment and operation was later
Progress. South Africa has met the Millennium decentralized to local government in 2003. It is possible
Development Goal targets for water supply and sanitation, that a supply-driven and infrastructure-focused approach is
according to its own service level definitions (which less suited to addressing the remaining challenges and that
are higher than those used internationally by the Joint delivery pathways that are more demand driven and involve
Monitoring Programme). South Africa has its own ambitious communities more closely may be needed.
service coverage targets of 100 percent coverage for both
water supply and sanitation by 2014. These targets are Although progress with investing in new infrastructure to
unlikely to be met for reasons elaborated below. reduce service backlogs has been impressive, this is not
the whole story. Where infrastructure exists, not all poor
Financial resources. South Africa has mobilized extensive households experience the benefits of this infrastructure as
resources to meet its service delivery targets. These are a result of a large number of poorly functioning systems
primarily through government capital grants, to provide in rural areas2 and, in some cases, having access restricted
new infrastructure, and operating grants, to support the in urban areas as a result of affordability or technical
ongoing provision of services to poor households and the problems.3
government’s Free Basic Water policy. Government grant
allocations to water supply and sanitation have increased There are also concerns related to the sustainability of the
significantly in real terms over the period. The use of grants infrastructure (both the new infrastructure that has been
from donors and external loans is insignificant in the built as well as the aging infrastructure which has been
context of the overall scale of government investment and neglected in favor of extending services). The evidence for
local mobilization of resources. Anticipated investments are this comes from multiple sources: a significant proportion of
significant but are not sufficient to achieve universal access rural water supply schemes are not functional; maintenance
within the planned timeframe. This is partly due to the high budgets are inadequate;4 many ventilated improved pit
cost of providing bulk water services (through regional (VIP) latrines are full and are not being emptied;5 many
schemes) to the remaining remote rural households and wastewater treatment works are operating over capacity
the high cost of urban sanitation (provision of waterborne and/or performing poorly;6 there are drinking water
systems is the accepted standard in cities and towns). The quality risks in small towns and rural areas;7 the full costs
existing cost model does not cater adequately for the of providing services are often not fully accounted for;
regional bulk infrastructure required for rural water supply and insufficient resources are available to the sector from
schemes in areas where groundwater resources are deemed user fees and government grants to maintain and sustain
to be inadequate or unreliable. services over time.
2Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
There is a shortage of the necessary skills and experience The performance of water boards acting in support of local
at the artisan, technical, engineering, and management government has been mixed, and water boards themselves
levels to operate, maintain, and manage water services have been subject to governance instability with rapid
appropriately in many municipalities.8 The replacement turnover at the board and senior management levels.10
of the old apprenticeship training for artisans with a new
approach has not been a success and there has been a In order to address these challenges, the South African
serious loss of good artisan skills in the sector. There has government, through collaboration between the
been a serious reduction in the number of engineers active Department of Cooperative Governance and Traditional
in municipalities to manage large infrastructure investment Affairs, the Department of Water Affairs and other
programs and many managers lack the necessary skills and government departments, is implementing an intensive
experience. turnaround strategy for local government.11
There are also governance failures within local government, This second Country Status Overview (CSO2) was
the tier of government responsible for water services commissioned by AMCOW and has been produced in
provision to households in terms of the constitution. collaboration with the Government of South Africa and
This has led to inappropriate appointments of staff and other stakeholders. Agreed priority actions to tackle these
interference in the day-to-day operations of the service, to challenges, and ensure finance is effectively turned into
the detriment of the overall functioning and sustainability.9 services, have been identified here.
Agreed priority actions to tackle these challenges, and ensure finance is effectively
turned into services, are:
Institutional framework
• Clarify the respective roles and responsibilities of the Departments of Cooperative Governance and Traditional Affairs
and the Department of Water Affairs with respect to an effective turnaround in the performance of water services in
municipalities, and clarify the respective roles of the departments of Human Settlements and Water with respect to
sanitation.
• Strengthen accountability by allocating responsibility for water services from district municipalities to local
municipalities where local municipalities are performing this function.
• Initiate an open debate on the respective merits of decentralized delivery of services versus regionalized delivery
taking into account local circumstances.
• Strengthen mechanisms to enforce compliance with legislated standards.
• Introduce minimum competency requirements for municipal water management.
Financing
• Initiate a study to understand the reasons for high capital costs and to make recommendations for improving value
for money in water and sanitation investment.
• Increase support to NGOs active in the sector.
• Actively increase the use of loan finance in the sector.
Monitoring and evaluation
• Develop a clearer understanding of recent trends in access to services.
• Simplify and rationalize local government reporting requirements for water supply and sanitation.
• Improve understanding of service outcomes, particularly health-related outcomes in relation to water and sanitation
investments.
3An AMCOW Country Status Overview
Rural water supply
• Undertake more regular surveys on the functionality and performance of rural water supply schemes.
• Develop a better understanding of the factors constraining the sustainability of rural water supplies and how these
can be addressed.
Urban water supply
• Improve the quality of urban water management with a view to sound asset management, best practice network
management, and appropriate pricing to ensure adequate maintenance, timely replacement of infrastructure,
reduced nonrevenue water (water losses and unaccounted-for water), and wise and effective use of public resources.
Implement a sound management development program for water managers.
Rural sanitation and hygiene
• Pilot a more demand-orientated approach to the provision of rural sanitation.
• Investigate the extent and seriousness of VIP latrine emptying challenges and the implications of these for policy,
technology choice, and future investment programs.
Urban sanitation and hygiene
• Develop a priority national initiative on sanitation in informal settlements, particularly in large cities, pilot new
approaches and seek to take these to scale.
• Explore new service delivery models for high density settlements where insecurity of tenure makes planning and
implementing standard waterborne sanitation solutions difficult.
4Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
Contents
Acronyms and Abbreviations............................................................................................................................ 6
1. Introduction..................................................................................................................................................... 7
2. Sector Overview: Coverage and Finance Trends................................................................................................ 8
3. Reform Context: Introducing the CSO2 Scorecard.......................................................................................... 11
4. Institutional Framework................................................................................................................................. 14
5. Financing and its Implementation................................................................................................................... 16
6. Sector Monitoring and Evaluation.................................................................................................................. 18
7. Subsector: Rural Water Supply....................................................................................................................... 20
8. Subsector: Urban Water Supply...................................................................................................................... 22
9. Subsector: Rural Sanitation and Hygiene........................................................................................................ 24
10. Subsector: Urban Sanitation and Hygiene....................................................................................................... 26
Notes and References.................................................................................................................................... 28
5An AMCOW Country Status Overview
Acronyms and Abbreviations
AfDB African Development Bank NGO Nongovernmental organization
AMCOW African Ministers’ Council on Water O&M Operations and maintenance
CAPEX Capital expenditure OPEX Operations expenditure
COGTA (Department of) Cooperative Governance and RSH Rural sanitation and hygiene
Traditional Affairs RWS Rural water supply
CSO2 Country Status Overviews (second round) SALGA South African Local Government Association
DWA Department of Water Affairs SWAp Sector-Wide Approach
GDP Gross domestic product UNICEF United Nations Children’s Fund
GNI Gross national income USH Urban sanitation and hygiene
HH Household UWS Urban water supply
JMP Joint Monitoring Programme (UNICEF/ WHO)
kl kilo liter VIP Ventilated improved pit (latrine)
l/c/d liters per capita per day WASH Water, sanitation and hygiene
M&E Monitoring and evaluation WHO World Health Organization
m meter
MDG Millennium Development Goal WSP Water and Sanitation Program
MIC Middle income country
Exchange rate: US$1 = 7.34 South African Rand.12
6Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
1. Introduction
The African Ministers’ Council on Water (AMCOW) commissioned the production of a second round of Country Status
Overviews (CSOs) to better understand what underpins progress in water supply and sanitation and what its member
governments can do to accelerate that progress across countries in Sub-Saharan Africa (SSA).13 AMCOW delegated this
task to the World Bank’s Water and Sanitation Program and the African Development Bank which are implementing
it in close partnership with UNICEF and WHO in over 30 countries across SSA. This CSO2 report has been produced in
collaboration with the Government of South Africa and other stakeholders during 2009/10.
The analysis aims to help countries assess their own service delivery pathways for turning finance into water supply and
sanitation services in each of four subsectors: rural and urban water supply, and rural and urban sanitation and hygiene.
The CSO2 analysis has three main components: a review of past coverage; a costing model to assess the adequacy of
future investments; and a scorecard which allows diagnosis of particular bottlenecks along the service delivery pathway.
The CSO2’s contribution is to answer not only whether past trends and future finance are sufficient to meet sector
targets, but what specific issues need to be addressed to ensure finance is effectively turned into accelerated coverage in
water supply and sanitation. In this spirit, specific priority actions have been identified through consultation. A synthesis
report, available separately, presents best practice and shared learning to help realize these priority actions.
7An AMCOW Country Status Overview
2. Sector Overview:
Coverage and Finance Trends
Coverage: Assessing Past Progress met the MDG targets. The key reason for the difference is
that the South African data uses different definitions for
The CSO2 compares countries’ own estimates of coverage an acceptable service compared to the JMP data. For the
with data from the UNICEF/WHO Joint Monitoring South African government, an acceptable basic level of
Programme (JMP).14 The impact of these different coverage service is a piped water supply within 200 m of a dwelling
estimates on investment requirements is also assessed. and a basic sanitation facility is regarded as a VIP latrine
(or equivalent). These definitions are for a higher level of
According to South African data and definitions, access service compared to the JMP definitions which refer to
to water infrastructure in South Africa improved from 58 only improved water sources and improved sanitation
percent in 1994 to 91 percent in 2009. Access to sanitation (including ordinary pit latrines).
infrastructure, starting from a lower base, improved from
34 percent to 76 percent in the same period (Figure Investment Requirements: Testing the
1).* Accordingly, South Africa has met the Millennium Sufficiency of Finance
Development Goal (MDG) targets for water supply and
sanitation. Methodology. South Africa has set itself ambitious
coverage targets, aiming for universal coverage for both
This report accepts that South Africa has met the MDG water supply and sanitation by 2014. The required capital
target with respect to water supply even though the investments (including major rehabilitation) have been
JMP data differs from the South African data. In terms calculated using a target of 2015 (rather than 2014)
of the JMP data, South Africa started from a higher to align with the approach used in other countries and
coverage base in 1990 and has made slower progress. The for ease of comparison between countries. The CSO2
conclusion from this data set is that South Africa has not costing model has been used, incorporating local unit cost
Figure 1
Progress in water supply and sanitation coverage
Water supply Sanitation
100% 100%
80% 80%
Coverage
Coverage
60% 60%
40% 40%
20% 20%
0% 0%
1985 1990 1995 2000 2005 2010 2015 2020 1985 1990 1995 2000 2005 2010 2015 2020
Government estimates Government target Government estimates Government target
JMP estimates MDG target JMP estimates MDG target
Sources: JMP 2010 Report and Department of Water Affairs (DWA).
* Official update 2010 report: 59 percent in 1994 to 93 percent in 2010 for water and 48 percent in 1994 to 79 percent in 2010 for sanitation.
8Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
estimates (based on a recent cost survey of engineering investments are likely to be underestimated and hence that
consultancies) and a technology mix assumed to remain anticipated investments are inadequate. The South African
constant over the period. There is a concern that the government estimates that the required investment to
CSO2 model does not adequately account for the water meet the total backlog (including the upgrading of water
resource development costs (dams and regional scheme services in informal settlements in association with the
components) for rural water supply investments, leading housing program) by 2014 is R82 billion (US$10.2 billion),
to an underestimation of investment requirements for including an investment in bulk regional infrastructure of
rural water supply. This issue is not as pronounced for R36 billion (US$4.5 billion).15
urban water supply because coverage is already very
high. However, the country requires major investments Sanitation CAPEX. In the case of sanitation, the
in new large urban water augmentation schemes over anticipated CAPEX is US$546 million per year, compared
the next 20 years. These investments have not been to a calculated required investment of US$1,218 million
taken into account in the model. Lastly, in the case of per year, revealing a gap of US$672 per year. The
sanitation, it is government policy to provide only flush South African government estimates that the required
toilets in urban areas. At the same time there is a need to investment to meet the total backlog (including the
rehabilitate, upgrade, and expand wastewater treatment upgrading of sanitation in informal settlements in
works. This results in high investment requirements for association with the housing program) by 2014 is
urban sanitation. Anticipated investments were obtained R67 billion (US$8.5 billion).16
from government medium-term (three-year) budgets
extrapolated into the future (Figure 2). It should be noted that the calculated investment
requirements are to provide universal access by 2015 (and
Water CAPEX. Anticipated capital investment (CAPEX) not the MDG targets which have already been met). These
for water supply is just under US$1 billion per year, targets are ambitious.
compared to a calculated required investment of US$857
million per year (CSO2 estimate). Although this indicates For these investments to be sustainable, the resources
that the anticipated investment is sufficient, the required necessary to operate and maintain assets need to
investment calculation does not adequately cater for be mobilized on an ongoing basis. In South Africa,
the future higher costs of rural water supply schemes. municipalities are responsible for operating and
Consequently, it may be concluded that the required maintaining assets (in most cases). Municipalities are
Figure 2
Required vs. anticipated (public) and assumed (household) expenditure
Water supply Sanitation
Required CAPEX Required CAPEX
Required Required
OPEX OPEX
0 500 1000 1500 0 500 1000 1500 2000
US$ million/year US$ million/year
Public CAPEX (anticipated) Public CAPEX/software (anticipated)
Household CAPEX (assumed) Household CAPEX (assumed)
CAPEX deficit
Source: CSO2 costing.
9An AMCOW Country Status Overview
Table 1
Coverage and investment figures
Coverage Target Population CAPEX Anticipated Assumed Total
requiring requirements public CAPEX HH deficit
access CAPEX
1990 2009 2015 Total Public Domestic External Total
% % % ‘000/year US$ million/year
Rural water supply 40% 82% 100% 433 314 314 397 27 424 0 -
Urban water supply 75% 96% 100% 617 542 488 509 8 517 57 -
Water supply total 58% 91% 100% 1,050 857 802 906 35 942 57 -
Rural sanitation 13% 61% 100% 1,114 405 405 162 8 170 0 235
Urban sanitation 53% 85% 100% 1,179 813 732 336 3 339 38 437
Sanitation total 34% 76% 100% 2,292 1218 1137 497 11 508 38 672
Sources: For coverage, JMP and DWA.17
required to set aside money for the depreciation of the Table 2
assets, and to budget appropriately for the operation and Annual OPEX requirements
maintenance (O&M) of the assets.
Subsector OPEX
US$ million/year
The total annual operating and maintenance costs are
Rural water supply 149
estimated to be US$530 million per year for water supply
Urban water supply 381
and US$493 million per year for sanitation (Table 2). The
Water supply total 530
South African government supports municipalities to
Rural sanitation 93
provide services to poor households through the equitable
Urban sanitation 400
share grant (an operating grant). The total grant amounted
Sanitation total 493
to around US$3.2 billion in 2009. Reliable estimates on
Source: CSO2 costing.
the share of this allocated to water supply and sanitation
by municipalities are not available. As coverage and levels
of service increase, the level of government support The investment requirements for sanitation could be
necessary to maintain viable municipal services will also lowered if different assumptions were made with respect
increase. This will place additional demand on the central to service levels.
government budget.
These considerations are only part of the picture.
South Africa has a free basic water policy. The sound Bottlenecks can in fact occur throughout the service
intention of this policy is to supply all poor households with delivery pathway—all the institutions, processes, and actors
a basic water supply (25 l/c/d) at no cost to the household. that translate sector funding into sustainable services.
Unfortunately, the unintended consequence of this policy Where the pathway is well developed, sector funding
is a frequent expectation on the part of households to should turn into services at the estimated unit costs.
receive free water. Consequently, municipalities receive Where it is not, the above investment requirements may
almost no revenue from households living in rural areas, be gross underestimates. The rest of this report evaluates
even where the level of service provided may be a yard the service delivery pathway in its entirety, locating the
connection. This situation creates a very high dependence bottlenecks and presenting the agreed priority actions to
on government grants to sustain the service. help address them.
10Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
3. Reform Context:
Introducing the CSO2 Scorecard
Prior to 1994, municipalities were responsible for providing involvement in project design and implementation, to that
water supply and sanitation (sewerage) services in cities and of sector leader, supporter, and regulator.
towns. The traditional rural areas were the responsibility of
satellite ‘homeland’ governments set up by the apartheid This recent history puts the service delivery pathway in
state. In 1994, the new democratic government assumed context, which can then be explored in detail using the
responsibility for water supply and sanitation nationally CSO2 scorecard, an assessment tool providing a snapshot
and embarked on an ambitious program of delivering basic of reform progress along the service delivery pathway. The
services, primarily in rural areas. A national Community CSO2 scorecard assesses the building blocks of service
Water Supply and Sanitation Program was established delivery in turn: three building blocks which relate to
with dedicated funding from the national government. enabling services, three which relate to developing new
The program—built on the experience of the NGO, Mvula services, and three which relate to sustaining services.
Trust, established a few years previously—had strong Each building block is assessed against specific indicators
elements of community consultation and participation, and scored from 1 to 3 accordingly.19
required community contributions, used local labor to
build schemes, and involved communities in the O&M of A major driver for sector reform has been the national
schemes.18 political priority to rapidly provide basic services to
households previously disadvantaged under the apartheid
Political and social pressures to accelerate delivery government. A second driver of reform has been the
increased over time. In response to these pressures, the Constitutional imperative to devolve the responsibility of
private sector was used in regional large-scale build- water services to local government. A third driver of reform
operate-train-transfer contracts. The pace of delivery was has been the reform of inter-governmental funding,
substantially increased, but at a high cost per household moving from dedicated and project-based funding to an
served. In 2000, a free basic water policy was introduced as approach of “budget support” between national and local
part of a broader commitment by government to provide government, within a stable and predictable medium-term
free basic services. In 2003, rural water services assets (three-year) budgeting framework.
were transferred to local government. This was in line
with the constitutional allocation of powers and functions The enabling environment for facilitating service
between national and local government, following the delivery in South Africa is well developed. The policies
principle of subsidiarity contained within the Constitution. and legislation were developed early in the reform
Meanwhile, local government had undergone its own process (with sanitation policy lagging a little behind),
restructuring, with the boundaries of local government and provided a sound basis on which to proceed. For
reconfigured to span both urban and rural areas. In parallel example, the Community Water Supply and Sanitation
to this, government’s funding policies were reformed. The program was accompanied by a White Paper, one of
dedicated water supply and sanitation funding (previously the first policy papers of the new government. Sector
allocated to the national department responsible for water) legislation was promulgated within four years of the new
was aggregated with other grants into a two-channel government coming into power. These policies enabled
municipal grant system: a conditional capital grant and an a consistent Sector-Wide Approach (SWAp) to be
unconditional operating grant. The capital grant, called the developed and implemented. Budget reform facilitated
Municipal Infrastructure Grant, was intended to support delivery too. Initially, dedicated program budgets were
investment in municipal infrastructure serving poor people. created at the national level. Later, this evolved to budget
The role of national government thus changed from direct support to municipalities, when they became responsible
11An AMCOW Country Status Overview
for providing and sustaining services. The parallel reform Figure 3
of local government budgeting also supported the Average scorecard results for enabling,
process. The Masibambane (“let us work together”) sustaining, and developing service delivery, and
program promoted a SWAp with donor support.20 For peer-group comparison
these reasons, South Africa compares well against its
Enabling
peer group of middle-income countries (MICs),21 with a
higher average score for enabling building blocks (see
Figure 3).
South Africa has also performed well with respect to
the ‘developing’ building blocks. The stable budgeting
framework has enabled good spending performance and
reporting on outcomes against budget. Criteria for the
allocation of grant budgets from national government to
local government are clearly defined and allocations are
equitable. Local governments must involve communities
Sustaining Developing
in their planning and budgeting processes in terms of
legislative requirements. The Fiscal and Finance Commission South Africa average scores
regularly reviews the fairness of budget allocations and Averages, MICs
outcomes. Service output performance is generally
Source: CSO2 scorecard.
good. Subsidies are largely spent as intended, drinking
water quality is monitored, and hygiene promotion and
monitoring tools have been developed. Sections 4 to 6 highlight progress and challenges across
three thematic areas—the institutional framework, finance,
The main challenges for South Africa lie in the area of and monitoring and evaluation (M&E)—benchmarking
sustaining services. Maintenance expenditure is not South Africa against its peer countries based on a
adequate and there are insufficient resources from tariffs grouping by gross national income. The related indicators
and subsidies to properly sustain the service. There are also are extracted from the scorecard and presented in charts
critical skills shortages, particularly at the technical and at the beginning of each section. The scorecards for
management levels. Nevertheless, South Africa performed each subsector are presented in their entirety in Sections
well relative to its peers in this area too. 7 to 10.
12Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
Table 3
Key dates in the reform of the sector in South Africa
Year Event
1994 First democratic elections and new emphasis on meeting the basic needs of all citizens. Community
Water Supply and Sanitation White Paper adopted and investment program launched
1996 Constitution finalized and adopted, allocating the functions of water supply and sanitation services
provision to local government
1997 Water Services Act promulgated, defining the role of DWA as regulator, the role of water boards
as bulk providers and the role of municipalities as responsible for provision
1998 National Water Act promulgated, redefining water rights in South Africa (away from riparian and
first-use system) and establishing a new framework to manage and regulate water resources
2000, 2001 Democratic local government established, local government legislation introduced, new
decentralized financial framework introduction. Basic Household Sanitation Policy adopted, with
a focus on grant-funded basic sanitation provision in rural areas
2002 Free Basic Water Policy introduced with intention to provide all poor households with a free basic
supply of water (25 l/c/d or 6 kl per connection per month)
2003 The Strategic Framework for Water Services approved. Updated water policy document. More
emphasis is placed on performance, sustainability, and moving to higher levels of service
2000 to 2010 DWA shifts its role from implementer and operator of schemes to supporter of local government.
A Joint National Support Strategy adopted (2007)
2009 The sanitation function is moved from DWA to the National Department of Sustainable Human
Settlements (housing)
2010 DWA changes emphasis from support to regulation. The National Water Services Regulation
Strategy is adopted, emphasizing drinking water quality and wastewater quality monitoring
through Blue and Green Drop programs. Sanitation allocated to national Department of Human
Settlements
2010 Turnaround strategy for local government approved by Cabinet and the implementation of
the strategy rolled out by Department of Cooperative Governance and Traditional Affairs, in
collaboration with DWA and other government departments
2010 National Planning Commission established in the Office of the President. Water identified as an
important focus area for the Commission
Source: Various.
13An AMCOW Country Status Overview
4. Institutional Framework
Priority actions for institutional framework
• Clarify the respective roles and responsibilities of the Departments of Cooperative Governance and
Traditional Affairs and the Department of Water Affairs with respect to an effective turnaround in the
performance of water services in municipalities.
• Clarify the respective roles of the departments of Human Settlements and Water with respect to
sanitation.
• Reduce/diffuse accountability by allocating responsibility for water services from district municipalities to
local municipalities where local municipalities are performing this function.
• Initiate an open debate on the respective merits of decentralized delivery of services versus regionalized
delivery taking into account local circumstances.
• Investigate factors underlying recent trends in service delivery.
• Strengthen mechanisms to enforce compliance with legislated standards.
• Introduce minimum competency requirements for water management.
South Africa has established clear sector goals and targets, Cooperative Governance and Traditional Affairs (COGTA)
has a sound policy and legislative framework for the sector, has oversight of local government while the Department
and has clearly defined the roles and responsibilities of of Water Affairs (DWA) supports and regulates local
institutions active in the sector. The Department of government with respect to water services (in collaboration
with COGTA and the provincial governments).
Figure 4
For these reasons, scores for related scorecard indicators
Scorecard indicator scores relating to institutional
compare well relative to other middle income countries
framework compared to peer group (see
participating in the CSO2 (Figure 4). Nevertheless, there are
endnotes)22
some gaps and challenges. The responsibility for sanitation
has recently been reallocated to the Department of Human
RWS
Settlements and the relative roles of this department and
the DWA must still be worked out. National government
sets national targets but responsibility rests with local
government to deliver. National government provides
general budget support to local government (capital and
USH UWS operating grants) but does not control how this money is
locally allocated and spent. There is a lack of clarity with
respect to the responsibility for hygiene promotion and
how this relates to new sanitation investments. These and
other institutional challenges are elaborated below.
RSH
South Africa average scores Respective roles of Departments of Water and
Averages, MICs
Human Settlements. The Water Services Act addresses
both water supply and sanitation and gives the DWA a
Source: CSO2 scorecard. very clear regulatory role with respect to both water supply
14Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
and sanitation services. The implications of allocating the Urban bias and preference for service
responsibility for sanitation to the Department of Human upgrades. The decentralization of service delivery to
Settlements need to be addressed within this context. local government, together with the design of the local
government system, has arguably led to a tendency
Targets and decentralization. There is an inherent towards urban bias as well as a preference for investment
tension between the setting of national targets in service upgrades rather than provision of services
and achievement of these targets in the context of to marginalized rural communities. Whereas national
decentralized service delivery. National government can government prioritized investments to communities
increase budget support to local government but does without services, and provided a basic level of service,
not control local service delivery choices. These are subject the outcomes-based survey evidence suggests that
to local democratic processes within a national legislative spending has shifted to providing higher levels of service
framework. For example, the equitable share to local possibly at the expense of providing basic services to the
government is an unconditional operating grant. unserved.23
Accountability between tiers of local Community-based operations. Although South
government. A distinctive feature of South African Africa has good experience with community-based
local government is its two-tier structure, with wall- operation of rural water supply systems, there appears
to-wall local government at both the local and district to have been a tendency for municipalities to take over
level. The responsibility for water provision is allocated these operations itself. Ironically, the decentralization
to either the district or local municipality. However, it is of service delivery to municipalities seems to have been
common practice for a district municipality (that has been accompanied by a ‘centralization tendency’ among the
allocated the responsibility for water services) to ask a local municipalities themselves.
municipality within its area to undertake water services
provision on its behalf. Problems have been experienced Role of the private sector. South African water
with this arrangement, which are typically related to clarity policy and legislation contain a policy bias towards public
of roles and responsibilities, allocations of budgets, and management of water services. Nevertheless, South
addressing instances of poor performance. Africa has had both varied and good experiences with
the participation of the private sector. The build-operate-
Local government capacity. Many municipalities train-transfer contracts to deliver rural water supply
struggle to attract and retain the necessary managerial infrastructure at scale were arguably a success if measured
and technical skills and experience to manage water against the primary goals of scale and speed. The five-
services operations adequately. year management contract for Johannesburg Water is
widely regarded as a success. Perspectives differ on the
The role of water boards. Prior to 1994, water merits and benefits of the small number of concession
boards sold bulk treated water to municipalities and and lease contracts. These are generally not favored by
mines. After 1994 the role of water boards was expanded. municipalities. Nevertheless, the private sector still plays
From 1994 to 2003 some water boards operated rural an active role in supporting municipalities. This role goes
water supply schemes on behalf of the DWA. These assets beyond its extensive role in design and construction, and
were then transferred to local government. Water boards includes management and operational support.
can still play a support role to municipalities, and can be
contracted by municipalities to manage and/or operate Pricing. National government sets norms and standards
municipal water systems on behalf of municipalities. There for the pricing of water, but local government is free
is a national debate under way on the future role of water to determine its own price levels within this guiding
boards. Should water boards be mandated to manage framework.
bulk and/or retail water services in terms of a regionalized
provision model (such as that in existence in Brazil)? What Enforcement. The relative emphasis between national
are the Constitutional implications of this choice? Bearing government support to local government and the
in mind that the full decentralization of service delivery enforcement of regulated standards needs to be clarified.
responsibilities to local government is very recent (2003), Mechanisms to effectively enforce compliance need to be
is it too soon to be reconsidering this choice? strengthened.
15An AMCOW Country Status Overview
5. Financing and its Implementation
Priority actions for financing and its implementation
• Initiate a study to understand the reasons for high capital costs and to make recommendations for
improving value for money in water supply and sanitation investment.
• Increase support to NGOs active in the sector.
• Actively increase the use of loan finance in the sector.
Substantial reform of South Africa’s public financial Key reforms have helped establish this sound financial
management policies and processes stands out as a major framework: of budgeting, financial management, and
achievement and a key enabler of effective spending on government grants. South Africa adopted a medium-term
water supply and sanitation investments. South Africa income and expenditure budgeting framework soon after
adopted a sectorwide approach early on, set targets 1994 at the national level and then extended this to the
to achieve universal coverage, mobilized its resources, local government level later on. This created a stable and
developed the necessary plans and translated these predictable basis for planning investments.
into budgets, monitored spending against budgets and
achieved a high level of spending. Consequently, South The budget reform was accompanied by a more extensive
Africa has performed well relative to its peers (Figure 5). reform of the financial management, accounting and
reporting systems, including the development of new
legislation.25 This created the necessary basis for sound
Figure 5
accounting standards, common reporting, and clearly
Scorecard indicator scores relating to financing
regulated procurement processes. These reforms have
and its implementation, compared to peer
played a very significant enabling role for government in
group24
general, and have also benefited the water sector.
RWS Grant reform also began soon after 1994, with a
dedicated grant to support the Community Water Supply
and Sanitation program. This grant was managed by
the national DWA which procured directly on a project-
by-project basis. This proved to be cumbersome and
USH UWS
the process of procurement was accelerated through
contracting intermediary ‘implementing agents’. These
agents in turn procured on a project-by-project basis.
The practice evolved to larger build-operate-train-transfer
contracts with the private sector. To coincide with the
RSH
reform of local government, the numerous sector-
South Africa average scores based government grants were consolidated into a two-
Averages, MICs channel grant system comprising a capital grant and an
Source: CSO2 scorecard. unconditional operating grant. These grants are, in effect,
16Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
budget support grants to local government. The grants Crowding out private finance. It is possible that
are stable, predictable, and allocated equitably between the very significant increases in government grants have
municipalities.26 crowded out the use of loan finance in some municipalities.
The extensive availability of grants may also have lowered
Notwithstanding these significant achievements, there household willingness to invest in water supply and
still is room for improvement in some areas. These are sanitation improvements.
elaborated below.
Value for money. South Africa’s average per capita
Support to NGOs. Over 95 percent of sector funding investment requirement is expensive compared to the
has been direct government funding and loan financing. region (Figure 6). Although this is partly the result
There is very limited donor support (Figure 6). The majority of higher service levels, this also points to possible
of the donor support has been through a sectorwide inefficiencies within a sector context of investment driven
program called Masibambane.27 An unintended by government grants and a lack of strong competitiveness
consequence of this is that NGOs, historically strong and in the procurement environment. The South African
a source of innovation in the sector, have struggled. The government’s estimates of the annual capital investment
major water NGO, Mvula Trust, for example, must rely on requirements are considerably higher than those estimated
contracts from government to survive. in this report.28
Figure 6
Overall annual and per capita investment requirements and contribution from different sources
Rural water supply: Urban water supply: Rural sanitation: Urban sanitation:
Total: $314,000,000 Total: $542,000,000 Total: $405,000,000 Total: $813,000,000
Per capita: $278 Per capita: $385 Per capita: $213 Per capita: $420
Domestic anticipated investment Assumed household investment
External anticipated investment Gap
Source: CSO2 costing.
17An AMCOW Country Status Overview
6. Sector Monitoring and Evaluation
Priority actions for sector monitoring and evaluation
• Develop a clearer understanding of recent trends in access to services.
• Simplify and rationalize local government reporting requirements for water supply and sanitation.
• Revise water supply and sanitation access targets.
• Improve understanding of service outcomes, particularly health-related outcomes in relation to water
supply and sanitation investments.
South Africa has a relatively well-developed monitoring conducted and these include questions on access to water
and evaluation (M&E) framework with strong scores on supply and sanitation, and service quality. Nevertheless,
related scorecard indicators, relative to its peers (Figure 7). some areas of monitoring and evaluation can be improved.
Sector targets are set, reviewed regularly and progress is Some challenges are elaborated below.
measured against them. Overall spending on water supply
and sanitation is identifiable and donor funding is included Understanding urban and rural performance.
in government budgets. The equity of subsidy allocations The design of the local government system (including
is periodically reviewed. Sector outputs such as drinking the boundaries, financial system, reporting system and
water quality and wastewater discharge compliance so on) does not lend itself to a clear differentiation and
are monitored. Regular national household surveys are understanding of urban and rural subsector performance.
For the purposes of this report, municipalities that serve
metropolitan areas, cities, and large towns are assumed
Figure 7
to be urban, and municipalities that serve small towns and
Scorecard indicator scores relating to sector M&E,
the traditional rural areas are assumed to be rural.30
compared to peer group29
Reconciliation of JMP and country baseline
RWS data. There is a large difference between the JMP and
country data for the baseline, though the data is more
closely aligned for 2009.
Understanding recent trends in access to
USH UWS services. Different sources of data show different trends
in access to services. The recent general household surveys,
for example, show declining performance in household
access to basic water supply and sanitation services.
RSH Understanding financial performance. In the
South Africa average scores absence of better financial ring-fencing of the water
Averages, MICs services function within municipalities, it is difficult to
properly understand the financial performance of water
Source: CSO2 scorecard.
services.
18Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
Revising sector targets. The current sector targets (to Reporting on spending efficiency. There is a need
achieve universal access by 2014) are unrealistic and need for a greater emphasis on value for money when reporting
to be revised. on grant spending.
Municipal reporting. Municipal reporting on water Understanding citizen perspectives. Much of the
services compliance and performance is poor. Current reporting on sector performance is ‘technocratic’. These
reporting requirements are too onerous. Too much detail is statistics tend to hide poor persons’ everyday experiences
required and reporting requirements to different national of services. There is a need to deepen understanding of,
departments are overlapping and duplicated. There is a and to improve reporting on, citizen perspectives on service
need for the rationalization and simplification of reporting access and quality. The ‘citizen voice’ initiative is a good
requirements. starting point from which to develop this area further.
19An AMCOW Country Status Overview
7. Subsector: Rural Water Supply
Priority actions for rural water supply
• Improve national-level knowledge of the status of rural water supply schemes, including more regular
surveys on their functionality and performance.
• Develop a better understanding of the factors constraining the sustainability of rural water supplies and
how these can be addressed.
South Africa’s own country data show good progress in the anticipated CAPEX of over US$400 million per
access to a piped water supply within 200 meters, starting year. However, it is likely that the required CAPEX is
from a low base. The JMP data also shows progress, but underestimated because the underlying unit costs do not
from a much higher base and consequently at a slower take into account the cost of water resource development
pace. The differences arise from a difference in service and the high costs of regional schemes. There is very little,
level definitions. if any, cost-recovery from users, hence the anticipated
capital investment grants will also need to meet the
For practical reasons, the universal coverage target for burden of O&M costs. Additional OPEX (and hence grant)
2014 is unlikely to be met, notwithstanding the trend requirements are estimated at US$149 million per year.
shown. The pace of delivery in rural areas has also slowed
(notwithstanding the simplified linear depiction in Figure Figure 10 shows the scorecard results for the rural water
8). There are concerns related to the functionality and supply service delivery pathway. The scorecard uses a simple
sustainability of rural water supply schemes. color code to indicate: building blocks that are largely
in place, acting as a driver on service delivery (score >2,
CAPEX requirements are estimated to be about US$314 green); building blocks that are a drag on service delivery
million per year. These requirements are less than and require attention (score 1–2, yellow); and building
Figure 8 Figure 9
Rural water supply coverage Rural water supply investment requirements
100%
80%
Coverage
60% Required CAPEX
Required
40% OPEX
20%
0%
1985 1990 1995 2000 2005 2010 2015 2020 0 100 200 300 400 500
US$ million/year
Government estimates Government target Public CAPEX (anticipated)
JMP improved JMP, piped
Source: CSO2 costing.
Sources: JMP 2010 Report/DWA.
20Water Supply and Sanitation in South Africa: Turning Finance into Services for 2015 and Beyond
Figure 10
Rural water supply scorecard
Enabling Developing Sustaining
Policy Planning Budget Expenditure Equity Output Maintenance Expansion Use
3 3 2 3 3 3 1 2 3
Source: CSO2 scorecard.
blocks that are inadequate, constituting a barrier to service Figure 11
delivery and a priority for reform (scoreAn AMCOW Country Status Overview
8. Subsector: Urban Water Supply
Priority actions for urban water supply
• Improve the quality of urban water management with a view to sound asset management, best practice
network management, and appropriate pricing to ensure adequate maintenance, timely replacement
of infrastructure, reduced water losses and unaccounted-for water, and wise and effective use of public
resources. Implement a sound management development program for water managers.
Urban water coverage is 96 percent according to South investment requirements. This estimate does not take into
African Government data, and 99 percent according to account major bulk water augmentation schemes whose
JMP data. The difference is most likely due to the definition costs are recovered through the water tariff. South Africa
of urban areas used in this report.31 will need to, and plans to, invest significantly in water
resource development costs for its major urban areas.
Although this level of coverage is excellent, and includes
many households living in informal settlements, some South Africa performs well in the urban water supply
households experience restricted access that may be less subsector in all of the elements measured in the scorecard
than 50 liters per person per day. These problems typically (Figure 14), and is ahead of its peer group (Figure 15).
arise due to technological and management problems The budgeting system is sound but the local government
rather than as a result of policy. framework does not facilitate separate identification
of urban (versus rural) expenditure. There are also still
The anticipated public CAPEX of over $500 million per areas of concern related to unaccounted-for water,
annum, supplemented by an additional 10 percent user maintenance expenditure, network asset management,
contribution, is sufficient to meet the CSO2’s estimate of and pricing.
Figure 12 Figure 13
Urban water supply coverage Urban water supply investment requirements
100%
80%
Coverage
60% Required CAPEX
Required
40% OPEX
20%
0%
1985 1990 1995 2000 2005 2010 2015 2020 0 500 1000
US$ million/year
Government estimates Government target Public CAPEX (anticipated)
JMP improved JMP, piped Household CAPEX (assumed)
Sources: JMP 2010 Report/DWA. Source: CSO2 costing.
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